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My husband and I bought our first home a few years back making 39,000 and our home was 159k.
We were easily approved, but ONLY because we had ZERO other debt and excellent credit scores. We also were approved for a down payment assistance program and didn't have to bring any money to closing.
Our mortgage payment at that time was 1050 a month which not only included the principle and interest, but PMI, property taxes, and home insurance.
For us it was a no brainer, because a 1 bedroom apartment was going to cost us MORE than the mortgage payment, and we'd actually be paying off something rather than throwing our money away.
We didn't have any issues paying our mortgage, other bills and living comfortably. Sure, at times it was a bit tight, but nothing major.. mainly just "oh I guess we can't go out to eat at all this month." One thing that gave us peace of mind was that it was a new build and under warranty for 2 years, plus all the major appliances (a/c, water heater, for example) are still under warranty and will be for another year.
We have since doubled our income, and our mortgage has gone up to $1,200/month (increased property taxes) plus we have added a small car payment, blah blah.
For us, it was one of the best decisions we ever made. Our home value has increased 50K in the 4 years we have lived in it, plus we have paid off nearly 20K of our home loan (I pay a bit extra every month) so we have quite a bit of equity built up.
I say pay off your loan first and make sure you have a at least a couple months living expenses saved up in addition to the money you will need for the down payment + closing costs. You do not want to drain every cent you have to get into the house.
I just did. My wife and I earn 40k combined a year currently (she isn't working currently due to pregnancy and I just changed careers so I'm starting at the bottom again), and we bought a home that was ~$158k. It is fine, but we have always lived very frugally (but comfortably) and do wish we had some more money, but that should come in time as I gain more experience in my career. It also helped us a lot by having little debt (just some school loans) and we both have excellent credit scores.
Wait. Definitely wait.
When I was making $32k a year, I was approved for a $150k mortgage. I took out a $113k mortgage when I bought my house. Within a year, several repairs were needed and I found myself having to put said repairs on a credit card. Well, that was a terrible cycle because my budget was stretched so thin, I couldn't afford it. Hello second job.
I spent 5 years working 25-30 hours a week in retail on top of my career. Tired of working to death, I decided to relocate back to my home state. I sold my house for what I owed (It went under contract quickly, it fell through, then I had a stale listing to deal with -and was living out of state- and had to repeatedly drop the price.) When I bought my house I had student loans and a car payment. When I sold my house, I had that as well as $13,000 in credit card debt.
I make more than double what I made when I bought a house, but I'm still renting. I will not buy a house again until I have a 20% down payment AND a cushion for repairs. I hate renting. But I will be patient and do it the smart way the next time.
You really need to be careful with that credit card debt though. 7500 is a LOT for a couple that only makes 44k/year. You need to be paying that off asap.
Also, where in the world is a house still available for 155k?
Nope. You don't make enough. The rough figure to go by is 3 times your salary. You can use a bank calculator. Don't be house poor. It sucks!
I agree 100%.
Step 1: Pay off your debt.
Step 2: Don't incur new debt.
Step 3: Save up at least 4-6 months of expenses that you *only* use for emergencies.
Step 4: Save up for a down payment for your house.
Step 5: Purchase a house that has a payment of ~25-30% of your take home pay.
Step 6: Repeat Step 2 over and over forever.
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